The houses are stylish, discounted and very attractive. They especially appeal to the middle class.
They are heavily marketed in glossy brochures, websites and media adverts. But underneath all that glamour, a well spin web of conmanship lies.
Despite the idea of purchasing a house off-plan being affordability, many house-buying schemes have collapsed with investor monies leaving thousands misery.
Off-plan buying means purchasing a property especially a house before it has been built.
Last week, real estate firm Mizizi Africa Homes announced that its Sh54 million off-plan housing project, Penguin Estate, was completely sold out three months after it was launched. This clearly showed the popularity of the schemes.
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Suraya Property Group provides a case study. DCI asked all those conned within and out of the country to record statements so that the case is amalgamated.
Paul Maurice Syagga, who teaches land economics at the University of Nairobi’s Department of Real Estate says that even though off-plan housing is a “novel” idea, its risks are dreadful.
Prof Syagga explains that off-plan housing units are often purchased while under construction. “They are usually discounted in price in comparison to a completed unit because the buyers have partly participated in the construction,” he said.
He noted that the developer also gains by getting upfront payment without having to borrow expensively. He cited National Housing Corporation as a relatively successful off-plan housing project in Kenya.
He said that buyers take a risk. That is if the developer doesn’t complete the project on time or doesn’t complete it at all.
“The developer may be so ambitious to start a large project with the hope that buyers are forthcoming. The project stall if there are no enough investors,” he said.
Syagga warned that it was also possible that developers might be fraudsters operating a pyramid-like scheme. they eventually flee people's money. He also noted that Kenya lacks clear regulations governing off-plan sales.